Rural Marketing

Shikha Wadhwa

INDIAN INSTITUTE OF PLANNING & MANAGEMENT, AHMEDABAD

V I S I O N F O R AG R I C U LT U R E O F HLL

Submitted to Prof. Rakesh Bhavsar ______________________

In partial fulfillment of the requirements of the course

Rural Marketing
ON 20TH NOVEMBER, 2006

BY

Shikha Wadhwa
MBA SS-05-07

Indian Institute of Planning and Management

Rural Marketing Case2.1 VISION FOR AGRICULTURE OF HLL Q1. Critically evaluate the thesis of Mr. Banga.

Shikha Wadhwa

According to Mr. Banga the central problem in the agriculture sector is of the higher procurement prices which is somewhat balanced by hiking issue prices for the public distribution system but in reality has lead to low productivity compounded by a wasteful process of procurement, storage and physical distribution. In order to address such issues HLL vision is a three-pronged. Though country is well aware of the fact that precision farming, crop insurance, supply of inputs and leasing farm equipment are the methods of raising level of production but it fails to communicate and educate the farmers in the right way. According to the HLL visions first dimension, the same can be done by farmer service centers which would be a systematic approach to the services for the small farmers in terms of inputs by way of knowledge of precision farming, prudent water management, crop selection, price and weather information etc. Such centers can be run by both the government and the private enterprises combining with banks, insurance companies, storage companies etc. This would be a very apt approach to address the problem of higher procurement prices. As the input costs are very high the farmers would get better knowledge of about their crops. They would be more educated and aware about their crops which according to economies of scale would lead in higher levels production with same procurement costs and would thus provide a balance for PDS too. The second dimension of the vision is about revamping the legal framework for freeing trade in food commodities from restrictions and harmonizing multiplicity of food laws not only at the central and state level but also with the international CODEX. The third dimension of the vision is about the issue of fiscal levies on agricultural commodities like mandi fee, sales tax, octroi, central excise etc. the existing regime that discriminates packaged goods as against food products sold loose for the purpose of such taxes needs to be revisited. Both of these approaches suggests improvement of the legal framework in the agricultural sector which would lead to freeing the restrictions of trading food commodities both at national and international markets, opening up new market opportunities matching the international standards. All these approaches are very deserving to be included in the tenth plan but as been mentioned in the case too, there has to be a model to closely examine the official bias against the entry of private corporate in the agriculture sector.

Indian Institute of Planning and Management

Rural Marketing

Shikha Wadhwa

Q2. From your understanding of the Indian economy, make suggestions to make rural farming more viable. Rural farming in India accounts for a major part of income and a very important component of GDP. According to the present scenario of the agricultural sector of Indian economy, there are many farmers who are committing suicides because they arent able to pay back or crop failures. With such situation where inflation is reaching at its peaks, increasing procurement costs and dynamic economy there are several measures which can be taken in order to make rural farming more viable as listed below: With the kind of suggestion Mr. Banga gave about the farmer-service-centers, apart from providing them knowledge of farming, prudent water management, crop selection, crop insurance through insurance companies and banks etc the farmers can also be provided technology. They should be made aware of the latest technology coming in the sector which would help them in having a competitive advantage in markets. With low costs labor pool available in the country they can also earn foreign exchange through exports. Proper knowledge should be provided for the same. With the knowledge they should also be trained on field, may be by close supervision from the time seedlings are planted till the harvest. Initiatives should be taken to avoid such suicides by providing them micro credits at minimal interest rates. Though government is already giving lot of subsidies in this sector, initiatives can also be taken to develop a plan which provides training-on-field adding up to free close supervision by experts or scientists and replacing the crop if infected free of cost. The plan can be developed targeting a particular area. Some awareness programmes should be developed for that area and carried on from time to time at uniform intervals keeping in mind the proper frequency and reach.

Indian Institute of Planning and Management